Reading the Tea Leaves

The Ontario automobile insurance product reforms have been in place for nine months. Based on the expected two-month renewal lead time under which the industry operates, almost all consumers’ policies in the province have been processed and seen their standard level of benefit reduced — unless consumers have purchased some of the new optional accident benefits created.

One recurring question is this: “How many Ontario policyholders have purchased the new optional accident benefits?”

Each year in April, the Insurance Brokers Association of Ontario (IBAO) hosts regional update meetings with our members across the province to update them on industry news, market trends and the association’s activities and upcoming initiatives. This also provides us with a great opportunity to discuss issues like the take-up of optional accident benefits directly with our broker members.

The difference in uptake of these options from region to region around the province is quite dramatic. It depends on the customer base of the brokerage, whether it responds to blue-collar, white-collar, industrial or rural demographics. Each of these segments will have different answers.

Standard Practices

One point we stress to our members when talking about the reforms is that presentation of the options available to consumers must be an ongoing standard practice during any automobile insurance transaction. I would suggest the second and third renewals following the implementation of these reforms demand just as much attention as the first. The industry, working with Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO), and the brokers’ self-regulating body, Registered Insurance Brokers of Ontario (RIBO), developed a plan providing communications to all Ontario policyholders about the reforms. Three separate notices reached each policyholder prior to changes occurring to their coverage.

There is no such required communication taking place on the second and third renewal. This means brokers are proactively continuing to make clear to consumers they have options available. Each time they contact their broker, consumers will need reminding the auto product has changed. Consider the consumer who, 12 months from now, has an accident and says they didn’t know their coverage had been reduced. They have no recollection of a flier or mailer they received more than two years ago. Our members are working to ensure such a scenario doesn’t take place. Each interaction with a client, on an ongoing basis, brokers should reinforce their clients’ options and make them aware of their choices.

In an effort to support members’ activities during this upcoming second renewal cycle, the IBAO is providing template flyer materials through an online, “members only” service. These flyers can be customized with brokerage-specific branding and contact information, electronically, right from the broker’s office. The broker can then order a desired quantity of the finished print job through the IBAO’s integrated print service. Or brokers can download the PDF file they’ve created and take it to a local printer. These types of support tools ensure the language IBAO member brokers provide to their consumers is consistent, making it easy for member brokers to inform their consumers. These auto insurance reforms brought with them workflow and process changes that brokers know will be an ongoing part of the sale and service of the auto product. The IBAO will continue to support broker operations with ongoing training materials and seminars as brokers add new staff, or support existing staff with refresher training.

Claims Processing and Delivery

The reforms’ longer-term affects on the affordability of the product are continuing to unfold. Recent rate filings we’ve seen suggest the reforms are stabilizing consumers’ premium costs, with much more modest increases being sought in the last 12 months than during the two years prior to the changes. This is good news for the Ontario consumer, who is paying more for auto insurance coverage than any other provincial resident in Canada.

The reforms have now had eight months to affect the processing and delivery of claims services. On this basis, insurers are now asking for some items within the structural and procedural guidelines of the Statutory Accident Benefits Schedule to be addressed.

The reforms have now had eight months to affect the processing and delivery of claims services. On this basis, insurers are now asking for some items within the structural and procedural guidelines of the Statutory Accident Benefits Schedule to be addressed.

One such requirement is for the insurer to respond to a proposed treatment plan submitted by a health care provider within 10 days. If the insurer is unable to meet this timeline, then any treatment plan submitted is “deemed approved” and the insurer must pay in accordance with the plan. This mechanism is a fraud magnet, with some unscrupulous medical treatment facilities taking full advantage.

Reliable industry sources have reported incidents of treatment plans being submitted to underwriting offices in Hamilton or Thunder Bay by fax for an injured claimant in Toronto. The intent is clearly to provide what would be considered notice to an insurer, but in an indirect way, thus potentially running down the clock on the insurer’s ability to properly assess the treatment plan. IBAO has also been made aware of a submitted treatment plan that included a relaxation CD of forest soundscapes to help the injured insured relax – at a cost of $300. Unfortunately in this case, the submitted plan didn’t get to the appropriate adjuster in time. No doubt, this was the goal of the treatment centre; the plan was “deemed approved” and the insurer had to pay it.

The need for injured parties to get quick access to treatment dollars is obvious to all. This should always remain the highest priority when considering any review of these procedural requirements. That said, there should be some review of this and similar requirements that can make the product an obvious target for fraudsters. The recent reforms include provisions that require insurers to notify injured parties with open claims of the monies that have been paid and for what services. But to date, one could suggest this is not being used as effectively as it could be. Insurers should look at these types of provisions to help make consumers aware, if they are unaware, that the treatment centre they’re attending is billing for services not provided.

The reforms are still very recent. There will be ongoing reviews of the overall adoption of the new product structure by consumers, the insurers and the greater insurance industry. These considerations are already before the regulator, and they will be monitored as the new product ages. In the meantime, ensuring consumers are continually made aware of their options is paramount.